The Road to Recovery : Survey Finds Some Industries Rolling Along but Others Are Stalled : FOOD / BEVERAGES
In good times, people eat, drink and smoke too much. In bad times, people eat, drink and smoke too much. And that adds up to cheerful prospects of growth for most of the big food processors, tobacco companies and beverage firms.
“These are America’s great growth companies, year in and year out,” said Lawrence Adelman, analyst at the New York investment firm Dean Witter Reynolds.
The coming 12 months may prove especially strong for beverage and tobacco companies. Industry analysts broadly predict that food company earnings will rise an average 12% over the next year compared to the year before, while beverage and tobacco firms may see earnings jumps of 18% to 20%.
Actually, the idea of eating too much is out of vogue with many Americans, and food producers may feel a squeeze, even as the economy expands. An increasing number of consumers drink diet shakes at breakfast or lunch instead of eating full meals, for example.
“Everyone in the U.S. wants to look gorgeous, particularly in Los Angeles and Hollywood,” said David J. Adelman, also an analyst at Dean Witter.
Beverage producers are counting on a boost this summer as people who stayed inside during the Persian Gulf War restock their inventories of soft drinks, beer and other beverages.
But the tobacco companies may see the biggest growth of all--largely due to overseas smokers. In 1991, RJR Nabisco and Philip Morris are expected to send a combined 50 billion cigarettes to the Soviet Union. International tobacco sales for RJ Reynolds and Philip Morris could jump in the 20% range or even more, according to analysts.
